The time has come to focus on the upcoming mega projects that need funds separate from our annual fiscal budget. This requires creating dedicated funds to finance our future domestic infrastructure projects. Our new sovereign wealth funds must be made similar to that of Singapore’s GIC and Temasek and Abu Dhabi’s Al-Mubadala funds.

Even though Kuwait’s sovereign wealth fund is the oldest, dating back to the mid-1950s, it is now necessary to separate huge projects in the annual budget. Previously, Kuwait relied on its own income, and resources were sufficient. However, with our current deficits in our oil income, it has become necessary to free the budget for running our daily operations.

We believe the funds should come from two main sources. Firstly, they should be generated through the privatization of non-core oil companies, specifically those involved in service sectors that do not impact the nation’s wealth, crude oil production, or any volume-related commitments. This approach aims to facilitate and support the development of new mega projects using internal resources.

Secondly, the funds must come from within the state by privatizing certain oil service companies that do not align with our core business activities. It is equally important to adhere to our constitution, ensuring clarity and lack of ambiguity. The funds must come exclusively from the sale of state-owned assets. We stress that only non-core oil services should be considered for privatization, similar to the privately-owned gas stations for cars.

We have to expand such non-core activities including services like fueling services at the airport, home delivery of gas cylinders, and operations at the gas factory. This also encompasses the administrative functions of the Kuwait Oil Tanker Company’s marine oil tanker agency, focusing on paperwork, documentation, and human resources management. Another example is the Kuwait Lube Oil Company, which can be sold to existing domestic companies. These small non-core entities are already being transferred between hands swiftly and with minimal costs and administrative activities. Private companies can efficiently manage these transitions, ensuring completion within less than a year.

Another significant non-core activity that has been operating at a loss for many years is the Kuwait Foreign Oil Investments Company. It is imperative to sell this entity immediately, without hesitation, to prevent further financial losses.

We now shift focus to the large oil servicing companies involved in refining, transportation, and petrochemical sectors, which were initially semi-private or fully privately owned. These include the Kuwait National Petroleum Company, Kuwait Oil Tankers Company, and Petrochemical Industries Company. These entities possess extensive experience and familiarity with the private sector. These companies should be sold, and the cash generated should be used to form the foundation of using Kuwait’s sovereign wealth fund for funding our mega projects.

These projects include the development of Mubarak Port, proposed railway stations, metro expansions, and other domestic initiatives such as renewable energy-based electricity generation. The funds should come from our sovereign foreign investments and the proceeds from the sale of oil servicing companies, estimated to be around $700 billion.

It perhaps is time for our future infrastructure to reap the benefits and enjoy the returns from our long-term investments in foreign markets, to be seen and celebrated by our citizens with pride.

By Kamel Al-Harami
Independent Oil Analyst
email: [email protected]